What happens to a consumer’s demand for low quality food items like coarse cereals when her income rises beyond a low level?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → The demand decreases, as it is an inferior good
Coarse cereals are an inferior good. Beyond a low level of income, a richer consumer switches to better quality cereals, so her demand for coarse cereals falls as income rises.
Option (1) The demand increases, as it is a normal good — Incorrect. For a normal good demand rises with income. Coarse cereals behave this way only at very low incomes.
Option (2) The demand decreases, as it is an inferior good — Correct. Demand for an inferior good moves opposite to income.
Option (3) The demand remains the same, as income does not affect demand — Incorrect. Income is one of the things demand depends on. A change in income does change demand.
Option (4) The demand increases, as it is an inferior good — Incorrect. Demand for an inferior good falls when income rises.
NCERT (2026-27): “2.4.3 Normal and Inferior Goods … For most goods, the quantity that a consumer chooses, increases as the consumer’s income increases and decreases as the consumer’s income decreases. Such goods are called normal goods. Thus, a consumer’s demand for a normal good moves in the same direction as the income of the consumer. However, there are some goods the demands for which move in the opposite direction of the income of the consumer. Such goods are called inferior goods. …” “Examples of inferior goods include low quality food items like coarse cereals. A good can be a normal good for the consumer at some levels of income and an inferior good for her at other levels of income. At very low levels of income, a consumer’s demand for low quality cereals can increase with income. But, beyond a level, any increase in income of the consumer is likely to reduce her consumption of such food items as she switches to better quality cereals.” |